Company name : hindustan unilever limited(HUL)

Product : pepsodent

By:Patha santhoshMba-aM14A035

About HUL :

• Hindustan Unilever Limited (HUL) is an Indian consumer goods company based in Mumbai, Maharashtra. It is owned by Anglo-Dutch company Unilever which owns a 67% controlling share in HUL. HUL's products include foods, beverages, cleaning agents and personal care products.

• HUL was established in 1933 as Lever Brothers and, in 1956, became known as Hindustan Lever Limited, as a result of a merger between Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd. It is headquartered in Mumbai, India and employs over 16,500 workers, whilst also indirectly helping to facilitate the employment of over 65,000 people.[6] The company was renamed in June 2007[7] as "Hindustan Unilever Limited".

• Hindustan Unilever's distribution covers over 2 million retail outlets across India directly and its products are available in over 6.4 million outlets in the country. As per Nielsen market research data, two out of three Indians use HUL products.[8]

Products from HUL:

Economics definition:

Humans have unlimited wants and means for satisfying wants and means for satisfying these wants are scarce.

Economics studies economic human behavior scientifically.it studies how humans try to optimize certain objective under given constraints.

About pepsodent

• Pepsodent was launched in 1993 in India and since then the brand has raised the benchmark on Oral Care solutions in India.

• Pepsodent has a range of toothpastes and toothbrushes that could take care of specific oral care needs. Pepsodent toothpaste fights germs to protect teeth against cavities and gives strong teeth, fresh breath and healthy gums.

• Pepsodent as an oral care expert offers solution to specific problems like bleeding gums and sensitive teeth.

• KEY FACTS

• Endorsed by FDI ( the largest dental association globally)

• Among the most trusted brands in India (Brand Equity, Economic Times, India)

• Also sold as Mentadent, Zhonghua, PS and Signal in other countries

Production process of pepsodent:

Cost analysis:

A process by which business decisions are analyzed.

The benefits of a given situation or business-related action are summed and then the costs associated with taking that action are subtracted. Some consultants or analysts also build the model to put a dollar value on intangible items, such as the benefits and costs associated with living in a certain town. Most analysts will also factor opportunity cost into such equations.

Various Cost Concepts

Nominal Cost and Real Cost: Nominal cost is the money cost of production. The real costs of production are the pain and sacrifices of labour involved in the process of production.Explicit and Implicit costs: Explicit costs are the accounting costs or contractual cash payments which the firm makes to other factor owners for purchasing or hiring the various factors. Implicit costs are the costs of self-owned factors which are employed by the entrepreneur in his own business. These implicit costs are the opportunity costs of the self-owned and self-employed factors of the entrepreneur, that is, the money incomes which these self-owned factors would have earned in their next best alternative uses.

Accounting Costs and Economic Cost: Accounting costs are the actual or explicit costs which are paid by the entrepreneurs to the owners of hired factors and services. On the other hand, economic costs not only include the explicit costs but also the implicit costs of the self-owned factors or resources which are used by the entrepreneur in his own business.

Opportunity Cost: The opportunity cost (or transfer earnings) of any good is the expected return from the next best alternative good that is forgone or sacrificed.

Business Cost and Full Cost: Business costs include all the expenses which are incurred in carrying out a business. The concept of business cost is similar to the accounting or actual cost. The concept of Full cost includes two other costs: the opportunity cost and normal profit. Normal profit is a necessary minimum earning which a firm must get to remain in its present occupation.Private costs and Social Costs: Private costs are the economic costs which are actually incurred or provided for by an individual or a firm. It includes both explicit and implicit costs. Social cost, on the other hand, implies the cost which a society bears as a result of production of a commodity. Social cost includes both private cost and the external cost. External cost includes (a) the cost of free goods or resources for which the firm is not required to pay for its used, e.g., atmosphere, rivers, lakes etc. (b) the cost in the form of ‘disutility’ caused by air, water, and noise pollution, etc

Total, Average and Marginal Costs: Total cost refers

to the total outlays of money expenditure, both explicit and implicit on the resources used to produced a given output. Average cost is the cost per unit of output which is obtained by dividing the total cost (TC) by the total output (Q), i.e., TC/Q = average cost. Marginal cost is the addition made to the total cost as a result of producing one additional unit of the product. Marginal cost is defined as ?TC/?Q.Fixed Costs and Variable Costs: Fixed costs are the expenditure incurred on the factors such as capital, equipment, plant, factory building which remain fixed in the short run and cannot be changed. Therefore, fixed costs are independent of output in the short run i.e., they do not vary with output in the short run. Even if no output is produced in the short run, these costs will have to be incurred. Variable costs are costs incurred by the firms on the employment of variable factors such as labour, raw materials, etc., whose amount can be easily increased or decreased in the short run. Variable costs vary with the level of output in the short run. If the firm decided not to produce any

output, variable costs will not be incurred.

Short-run and Long-run Cost: Short-run costs are the costs which vary with the change in output, the size of the firm remaining the same. Short-run costs are the same as variable costs. On the other hand, long-run costs are incurred on the fixed assets, like plant, building, machinery, land etc. Long-run cost are the same as fixed-costs. However, in the long-run even the fixed costs become variable costs as the size of the firm or scale or production is increased.

Relation Between Marginal Cost(MC) and Average Cost(AC): The relationship between MC and AC may be explained as follows:When MC falls, AC also falls but at lower rate than that of MC. So long as MC curve lies below the AC curve, the AC curve is falling.When MC rises, AC also rises but at lower rate than that of MC. That is, when MC curve lies above AC curve, the AC curve is rising.MC intersects AC at its minimum. That is, MC = AC at its minimum.

Some important marginal concepts:

The marginal use of a good or service is the specific use to which an agent would put a given increase, or the specific use of the good or service that would be abandoned in response to a given decrease.The marginal utility of a good or service is the utility of the specific use to which an agent would put a given increase in that good or service, or of the specific use that would be abandoned in response to a given decrease. In other words, marginal utility is the utility of the marginal use.The marginal rate of substitution is the rate of substitution is the least favorable rate, at the margin, at which an agent is willing to exchange units of one good or service for units of another.A marginal benefit is a benefit (howsoever ranked or measured) associated with a marginal change.The term “marginal cost” may refer to an opportunity cost at the margin, or to marginal pecuniarycost — that is to say marginal cost measured by forgone money.

Other marginal concepts include (but are not limited to):i)marginal physical product (sometimes also known as “marginal product”)ii)marginal rate of transformation, the rate at which one output or result must be sacrificed in order to increase another output or resultiii)marginal revenue productiv)marginal propensity to save and consumev)marginal tax rate

MARKET SHARE OF pepsodent(HUL)

Price elasticity :

In the toothpaste , the quantity demanded rose steadily as the price fell.it is general assumption of economics that demand and price are inversely related .that is , as price goes down , the quantity demanded rises ; as price rises , the quantity demended declines.

The percentage change in demand,relative to a percent change in price.

Pepsodent has its products which cover a large area.

Their products are Pepsodent germicheck+ Pepsodent whitening Pepsodent 2 in 1 Pepsodent G Pepsodent kids

In many industries , the products are differentiated.for one reason or another, consumers view firm’s brand as different from other brands.pepsodent toothpaste,is perceived to be different from colgate,anchor,and other tooth pastes.the difference is partly flavour,partly consistency,and partly reputation-the consumer’s image (correct or incorrect) of the relative decay-preventive efficacy of pepsodent.as a result,somecustomers will pay more for pepsodent.

Market structure(monopolistic)

Because HUL is the sole producer of pepsodent, it has monopoly power.but its mnopoly power is limited because consumers can easily substitute other brands if the price of pepsodent rises.although consumers who prefers pepsodent will pay more for it,most of them will not pay much more.the typical pepsodent user might pay rs 2 or even rs 3 a tube more,but probably not rs 10 more.for most consumers,toothpaste is tooth paste,and the differences among brands are small.

Makings of monopolistic competition:

A monopolistically competitive market has two key characteristics.

Firms compete by selling differentiated products that are highly substitutable for one another but not perfect substitutes.in other words , the cross price elasticities of demand are large but not infinite.

There is free entry and exit:it is relatively easy for new firms to enter the market with their own brands for existing firms to leave if their products become uprofitable.

Diagram representing monopolistic competition:

Competition in India’s toothpaste market has been heating up in the last few months. Procter & Gamble(NYSE:PG) recently entered the market with the launch of Oral-B Pro-Health, a specially formulated toothpaste for Indians that contains a patented ingredient. Meanwhile, Unilever (NYSE:UL) has been taking on the the market leader Colgate by airing comparative advertisements on Indian television, claiming that its Pepsodent Germicheck toothpaste is 130% better than Colgate.

Demand forecasting:

• Key Trends Fueling Growth In India’s Toothpaste Market?

• 1. Rising demand from rural India: Although only 42% of the people living in India’s villages and small towns use toothpastes, the proportion is increasing with rising rural income and greater awareness about oral hygiene through advertisements, dental camps and free dental checkups.

• 2. Rife oral hygiene problems: More than 30% of India’s population suffers from gum sensitivity and oral hygiene problems. Thus, India’s urban population is continuously upgrading from regular to functional toothpastes due to which the category is growing by 30%–40% annually.

We already know the dependency of demand on the price of the commodity.there are some other factors which influence demand.it is an iperative for the marketers to know about these factors to undrstand consumer demand and what could cause it to change.

This dependency of demand on various factor is described as demand function which can be expresses as,

PRICE=the relationship between price and quantity demanded has been discussed in detail under the law of demand.we can recollect that quantity demanded is inversely proportional to a change in price,ceteris paribus(everything remaining constant).this implies an increase in price causes an increase in quantity demanded and vice cersa.

Factors determining demand:

INCOME:the relationship between income and price

of a commodity is positive.ceteris paribus,a rise in consumer income will increase his affordability thereby having a positive impact on quantity demanded of a product.

TASTES & PREFERENCES: consumers tastes and preferences change with time and with trend and fashion,causing demand for goods and services to fluctuate accordingly.

PRICES OF RELATED GOODS:commodities may be related each other and the demand for a commodity is influenced by the price of related commodity.

The Price of InputsIn addition to the price of the product being the

main factor as stated in the Law of Supply, the price of production inputs also plays a part. The lowest price at which a firm can sell a good without losing money is the amount of money that it costs to produce it. Producing a good or service involves taking inputs and applying a process to them to produce an output. The output is the finished good or service, and inputs are raw materials, labor, utilities, liscensing fees, or even other goods. These inputs are also known as factors of production. If the price of inputs goes up, the cost of producing the good increases. And therefore at each price producers need to sell their good for more money. So an increase in the price of inputs leads to a decrease in supply. Simarly, a decrease in the price of inputs leads to an increase in supply.

Factors influencing supply:

The Current State of Production Technology

Production of a good involves taking inputs, applying a process to them, and producing an output. Well, production technology is involved in the process part. Increases in the level of production technology can make that process more efficient.

Goals of the firm:Generally, the aim of the firm is to maximize profits. Besides, maximum sales, maximum output and maximum employment are also the goals of the firm. These goals and change in them affect the supply of the commodity.

Price of the substitutes:The supply of particular goods is inversely related to the price of its substitute

The price of the commodity:The supply of a commodity very much depends on its price. There is direct and positive relationship between the price of the commodity and its supply.

Expected change in price:In case producers expect an increase in the price, they will withdraw goods from the market. Consequently, supply will decrease. If price is expected to fall in future, supply will naturally increase.

Number of producers:If the number of producers producing a commodity increases, its supply will increase. With the exit of producers, the supply would decrease.

Internal peace and stability:Existence of internal peace and stability will increase the production and supply of a good. With political disturbances, labor unrest and wars production and supply of a good will be hampered.

Natural factors:Natural calamities like flood, drought and cyclone reduce the supply of a commodity. If natural disasters are absent, production and supply of a good will increase.

Means of transport:Goods transport and communication facilitates free and quick mobility of factors of production to the producing centers and the final products to the market. Presence of good means of transport and communication thus increases the supply of a good. The supply curve will shift to left.

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